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Top Emerging FASB Standards

FASB is gearing up to introduce some new accounting standards.

The Financial Accounting Standards Board is gearing up to make final rulings on a number of new standards and proposals, many of which concern small and mid-sized business reporting. The agency is in varying phases of the decision making process on these issues, with some coming to a vote soon and some months from publication. Here are some standards that are currently under consideration by the FASB.

Private Company Reporting Standards

On May 23, members of the Financial Accounting Foundation, which oversees the FASB and other accounting standards organizations, will gather to make a final ruling on a structure for private company standard setting, the Journal of Accountancy reported. With more than 28 million private companies nationwide that would be affected by changes to the current standards, the issue has been a hotly contested one over the last few years.

According to some stakeholders, some of the current generally accepted accounting principles are irrelevant and require companies to waste time preparing aspects of a financial report that were originally designed to help investors assess the financial solvency of publicly traded organizations. Counter intuitively, those rules also apply private firms, leading many see them as useless, according to the JoA.

At their meeting, FAF trustees will be briefed on a number of proposals and reactions from businesses, accounting agencies and other stakeholders that were gathered over the course of a recent comment period. The trustees will then vote on whether to create the Private Company Standards Improvement Council. The proposed agency would make recommendations concerning the financial oversight of private companies. Those recommendations would then be subject to approval by the FAF.

Corporate Financial Disclosure

In the coming months, the FASB is expected to issue a paper discussing whether a decade's worth of rules and guidelines have led to over-disclosure from U.S. companies, according to The Wall Street Journal. As U.S. and international accounting standards merged over the last 10 years, companies have been required to disclose more and more information to meet the changing guidelines. In some cases, this has led to companies disclosing confusing information in an attempt to avoid legal troubles, according to the Journal.

Through its discussion paper, the FASB hopes to find new and better ways for companies to evaluate their disclosures and reduce unnecessary reporting data. Not only is the agency looking to reduce the quantity of information, it hopes the quality of information will improve. Companies could find ways to highlight newsworthy items in their reports, or reorder the footnotes to reflect investor interests, rather than current FASB guidelines, according to the Journal.

Post-Implementation Reviews

The FAF is currently asking relevant stakeholders to participate in a survey to help evaluate new standards governing disclosures about segments of an enterprise and related information, as well as regulations requiring recognition of acquired assets and investment risk disclosures. Specifically, the agency would like input on the rule from users, preparers, auditors, academics and regulators who are affected by it.

The new rules up for review include: FASB statement 131, which requires that public companies report financial and descriptive information about their reportable operating segments; FASB statement 141R, which requires an organization to recognize acquired assets and assign them a fair value on the date they are acquired; and Governmental Accounting Standards Board statement 3, which requires disclosures about deposits, investments and their related risks.

"The FASB and GASB standards selected for post-implementation review represented significant and important accounting changes when issued and continue to provide important information today to investors, stakeholders, and other users," said FAF Chairman John Brennan. "We look forward to assessing whether the intended financial reporting objectives underlying these standards are being met, while also obtaining stakeholder feedback on the application, usefulness, and effectiveness of these standards set by our boards."